UK Pension funds’ new £250m impact investment initiative reaches the short-list stage

Seven proposals being considered for Investing4Growth

The new £250m (€295m) ‘Investing4Growth’ impact investing scheme being run by five UK local government pension funds has short-listed seven investment proposals for further consideration.

The initiative was launched earlier this year by the Greater Manchester, West and South Yorkshire, West Midlands and Merseyside funds.

The idea is to hire asset managers to deliver both financial returns and create a positive economic, social or environmental impact. In total, there were 10 submissions from asset managers requiring £100m+, five proposals in the £50m-£100m range and 16 below £50m – from a total of 28 managers.

Speaking at the recent Local Authority Pension Fund Forum conference, Kieran Quinn, the chair of the Greater Manchester Pension Fund and LAPFF who’s a driving force behind the initiative, said: “By this time next year hopefully we’ll have had nine months of working with our partners.” He was unable to go into further details as yet about the projects under scrutiny.The search is being facilitated by Pensions & Investment Research Consultants (PIRC), spearheaded by PIRC Chairman Brian Bailey, the former Director of Pensions at West Midlands who is also on the board at not-for-profit financial intermediary firm Social Finance Ltd.

The funds emphasise they are “not reducing their risk and return requirements” for the investments, although one objective of the project is to alert asset managers to the potential market for them in the impact investment space. They are prepared to be flexible about how outcomes from the investments are measured as long as the impact can be “clearly identified”.
The search isn’t being conducted as a formal EU public procurement process, rather as a way to identify investment opportunities for consideration by each fund’s own in-house due diligence.
Investing4Growth grew out of a 2012 report by the Smith Institute, the Centre for Local Economic Strategies (CLES), the Local Authority Pension Fund Forum (LAPFF) and PIRC.